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tv   First Business  KICU  January 25, 2013 4:00am-4:30am PST

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president obama nominates a new wall street watchdog. in today's cover story, manufacturing gets its first big boost in years. the goverment addresses boeing's battery problems... but questions remain. plus, inside california's luxury housing boom. and are banks just plain greedy? a look at the latest money grab in traders unplugged. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's friday, january 25th. i'm angela miles. in today's first look: the dow climbs higher for the 5th straight session as apple takes down the nasdaq. the nasdaq fell 24 points. apple also played a role in holding down the s&p, which briefly crossed 1,500. apple shares tumbled $63 in trading yesterday. facebook founder mark zuckerberg is putting on a political face. he will host a fundraiser at his home february 13th for new jersey governor
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chris christie's re-election fund. and the post office is pushing up the price of a stamp by one penny to 46 cents starting sunday. scott shellady of trean group joins us this morning for a closer look at the markets. we have to talk about this 1500 in the s&p 500. when will this finally hold here, scott? > > it is not going to take very long. it is not going to take very long for one big reason: we've got to listen to what the fed is telling us. the fed is telling us that they are going to continue to print money. these pullbacks are going to be shallow. you are not going to see that 5-10% pullback i think a lot of guys are waiting for, so it will be within the next two or three weeks, and away we go again. > what do you think about this north korea threat? how is that affecting oil prices? > > i think folks want to blame
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some of the price of oil on it right now because of that, but ultimately at the end of the day we have got a decent economy now that is slowly but surely- i am not going to say it's great- but it is better than it was, and i think that's helping that oil price, and i think that the market will shrug off anything from overseas right now. i think if it was a middle eastern problem, yes. but right now, not north korea. > there was a major fallout from apple's disappointing earnings. how much further will this stock fall, do you think? where is the bottom here? > > i think it could go probably another 10% more. i think it could be the $410, $400 level, because i think ultimately it has fallen out of favor. like sometimes a bar just becomes unpopular for no good reason. i think that has kind of happened to apple here. they have lost steve jobs obviously, they haven't had anything really new to roll out. so they are going to have to have some sort of event to stop the slide. > scott shellady of trean group. good to talk to you today. have
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a nice weekend. > > ok. all hands are on deck to get to the bottom of boeing's battery troubles. that's according to the national transportation safety board, which said this week that the agency is still determining what caused problems onboard two dreamliner flights. the agency is investigating the battery - seen here - that caught fire on a jal plane which landed in boston. transportation safety board chair deborah hersman said the systems put in place to prevent the battery fire in that instance were proven faulty. boeing, the ntsb, and the federal aviation administration are working with electrical suppliers to further investigate the issues. president obama is nominating mary jo white as the next leader for the sec. "if confirmed by the senate, i look forward to using all of my energies working with my fellow commissioners and the extremely dedicated and talented men and women on the staff of the sec." white is a former u.s. attorney and defense lawyer for white- collar crimes on wall street. she famously took down mob boss john gotti. "she's a bit of an unknown on wall street. we know she's a tough prosecutor and she's never been in any kind of financial services job. the sec is more than just prosecuting bad people, it's also a regulatory body, about writing regulations, so i think wall street is going to take a wait- and-see attitude." that was james bianco of bianco
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research. the president also wants richard cordray to continue his role in leading up the consumer financial protection bureau. legislation that would dramatically change america's gun laws is now on the table. lawmakers have unveiled the assault weapons ban of 2013, a bill that would prohibit assault weapons and high- capacity ammunition magazines. if passed, the bill would also require background checks for the purchase of firearms. 150 semiautomatic rifles and pistols would fall under the umbrella of banned firearms. 2,250 firearms would remain legal. the deep depression in spain is driving unemployment to a record high. the unemployment rate reached 26.02% in the 4th quarter, with 5.9 million people out of work. that tops the great american depression of the 1930's, when unemployment peaked at 25%. closer to home, an index for
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manufacturing activity in the u.s. is showing encouraging signs this month. in our cover story, the preliminary flash purchasing managers index for manufacturing shows new orders at hundreds of companies across the u.s. at their highest level in more than 2.5 years. keith mccloud, whose laurens, iowa, company helps employees position heavy objects in the workplace, says finally, there's a flood of orders to be filled. "i've been here 20 years, this is the businest its been." at this trade show, even the demonstrator models were sold. "we usually don't sell them but he needed it. it was a good deal." the institute for supply management's purchasing managers index asks manaufacturers about new orders, productions levels and inventory to come up with a snapshot of the relative strength of the manufacturing sector. a preliminary peek shows the biggest jump between december and january in 22 months. some say the fiscal cliff uncertainty kept orders on hold. "we closed a lot of business in december. once they finalized that, they ordered." 37 years ago, egemin automation
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came up with robots to deliver mail in chicago's tallest buildings. now, they can't build these robots in holland, michigan, fast enough - some of the addtiional business an indirect result of healthcare reform. "our technology is automation. so the higher the government wants to make labor costs, the better for us." but some of the vendors who brought machines to keep it moving - no matter who's making it - say they are getting more inquiries but not full commitments yet. still, it's enough for nick kuecker's kansas city company that designs and builds these sorts of systems to look for more people to hire. "we're moving from hardware to software. so you're looking for i.t. people? yes, i.t. dot-net, c+ code writing and plc engineers for our company." the manufacturing outlook leads chris williamson, chief economist at financial information services firm markit, to believe the growth of gdp and non-farm payroll will accelerate in the first quarter.
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government cuts to defense are blamed for a huge loss at general dynamics. that tops our look at 4th quarter earnings this morning. general dynamics reported a $2-billion loss as its information tech business slows due to a decline in government contracts. xerox topped estimates, earning $335 million. it's shifting away from printing and offering more services. nokia is back in black, helped by its smartphone alliance with microsoft. for the first time in 143 years, the company is skipping a dividend. netflix wins the spotlight with $945 million in revenue and strong subscribers numbers. the stock rallied $43 yesterday. earnings from united continental show turbulent
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times. the airline plans to cut 600 management jobs in february at its chicago headquarters. fourth-quarter earnings dropped on slower air traffic, superstorm sandy, the united- continental merger transition, and the grounding of its 787 dreamliner jets. united's ceo says 2012 was "the toughest year of our merger integration," but the airline is "back on track." consumers are bracing for higher beef prices. the effects of last summer's drought may cause the price of beef to increase by 10 to 20 cents per pound. many farmers thinned out cattle herds as scorched corn crops triggered higher feed costs. in san antonio, texas, cargill is letting go of 2,000 workers as it closes a beef packaging plant. burger king is dropping an overseas beef supplier after traces of horsemeat were found in its products. abp food group supplies beef to b-k restaurants in the u.k. and ireland. b-k says there are no risks to human health, but some of bk's products may be
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temporarily unavailable. meanwhile, mcdonald's is emphasizing 'knowing your fillet o fish.' the golden arches is auditing its supply chain so that it will serve only "certified sustainable fish." sustainable is a term given to suppliers who do not harm the animal. mcdonald's is one of the top buyers of fish in the country. mcdonald's is also launching a new product, the fish mcbite, on its menu next month. a new ranking uncovers the top companies doling out the fattest paychecks. according to cnn, employees take home an average pay of $129,000 a year. in addition, top employees are awarded a trip to hawaii, plus $5,000 to tiffany and company. hitachi data systems also ranked high with annual pay of $134,000. employees are encouraged to apply for a larger bonus than just the standard 25%. and at cisco systems, where workers bring in an average of $135,000 a year, employees picked for jury duty or military service still receive a paycheck from
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the company even while they are out. if you are looking to take your facebook page from 'r' rated to 'pg,' now there's an app. facewash is a new app that will search your facebook past and clear out any content that you may not want friends, family, or possible employers to see. the app is in its early stages, but already has 20,000 users. amazon is pumping up the volume in the speech-recognition arena with its buy of ivona software. amazon hopes to compete with apple's "siri," which enables users to ask questions and provides answers. poland-based ivona's technology already supports features on amazon's kindle fire. still to come, outrageous new fees banks have come up with, and what it could mean for bank stocks. that's later in traders
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unplugged. but first, a problem not seen in the luxury home market for years is back. that's next. i wanted to be in the military since i was a kid.
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i served a total of 16 years. and at 19 years old, that's the first time i ever saw somebody die. coming back, i was raging. i started having pretty horrible nightmares. i started drinking a lot. i guess i never recognized it in myself. it all starts with going to the va. there's a whole community of veterans that just want to help you out. it's for the guys who couldn't come back, you owe it to them to live well. because they're not here with their families. americans suffer with a deadly disease. i was one of them. my disease was obesity and after consulting with my doctor, i received the effective treatment i needed. please join the obesity action coalition to acknowledge obesity as a disease
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visit obesity action dot org to sign an open letter pledging your support and for more information about how to talk to your doctor about weight loss and treatment options. together we can make a choice to end obesity now. a public service from the obesity action coalition. in the latest round of ups and downs on mortgage rates, rates are inching up. the 30-year fixed rose to 3.42% this week, up from 3.38% last week. the 15-year fixed is 2.71%, up
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from 2.66%. both rates, however, remain near recent record lows. those low rates hold the key to the rebound in the housing market. kye sisson takes us out west, where homes are becoming a california dream. life in the luxurious community of pelican hill on the newport coast in southern california comes easy for most of the residents here, and that sense of ease has spread along to the realtors as they sell these luxury homes faster than they have in years. sales of homes priced at one million dollars or more jumped 51% nationwide in november compared with a year earlier, according to the national association of relators - a trend experts say continued through december. cristi ulrich is a realtor with the smith group in newport beach and says she can't keep up with the demand. "we don't have any surplus of homes. in fact, the biggest problem we have is finding homes for our buyers. there are very few on the market."
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john mulville is the vice president of consulting at real estate economics, and says a rise in foreign buyers is fueling this luxury housing boom. "luxury homes are going to remain popular more than ever. i think there are people coming out of the other countries. foreign demand wants to go to places they recognize and they like to buy quality." buyers and sellers of luxury properties were very active toward the end of 2012, due in part to the capital gains tax increase that would take effect in 2013 for those making $400,000 or more. mulville also mentioned how the changing demographics of americans go hand-in-hand with the world- wide interest in american real estate. "americans are getting older, becoming more willing sellers at the same time as foreigners want to come in and buy, so it's a combination of things that's magnifying the demand in the upper end. financing is readily available as banks are on track to distribute more private jumbo loans than they have since 2007. > > with this rush of buyers to
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own these million dollar homes, is this a sign the economy turning around? experts say yes, but not so fast. "we might see some stimulus effect, but i don't think it will be a major decider if we pull out of the recession or not." for first business news, i'm ky sisson. recent data shows that luxury housing markets in south florida, denver, and phoenix are also making a comeback. still ahead, watch your wings. why chicken wing prices are soaring for the superbowl this year. our traders unplugged have a bone to pick after the break.
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sky-high stocks, greedy banks and chicken wings all make the list for this week's round of traders unplugged. joining us now from the floor of cme group, pro traders alan knuckman and andrew keene. good morning. round one: stock surge strategy: what should investors do with stocks at a 5-year high, so they don't wind up getting burned by wall street? > > if you look at the stock market right now, the s&p is up 5% this year. i think many people in the united states would be happy with 5% for the year or for their return. the one thing i want to do is get long gold. gold has been up every single year for the last 12 years. you can't say the same about the stock market. > > i like the nasdaq. it has
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actually been lagging behind the other stock indexes, and that is even with apple prices continuing to drift lower. just imagine when that stock does stabilize and turn around. > > when does it stabilize? > > i also like the canadian dollar on the upside. one tech stock to look at that has been beaten down, intel, kind of by yahoo, a rim turnaround play like we saw last year. > round two: greed is good: banks are now offering one dollar bills at atms. is this out of customer convenience or out of greed by the banks? > > this is an egregious greed example, but that is what banks do. they have to make money, since they had these reform laws where they did away with the draft overcharges where they were making millions and billions. this is just another way to make money. but i like the banking sector. i still think there is a lot of upside left. > > i can't believe i'm actually going to agree with alan. this is probably the first time in eight shows. the banks are being very greedy. like he said, they have to make money. they are not making money on interest rates because they are too low. they are not giving out mortgages, they are too low. they're also not making money on their trading desks. so why not charge a customer more money? > > but a $3 fee to take out $1? i'm not good with math but that is a lot- > > he is not good with math. > > ebe to etf index is sitting at 25. the target on that is 45. just for a halfway retracement from 2007 highs to these recent lows. > > we'll get a bet on that one, too.
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> round three: wing ding: chicken wing prices will be the highest ever for the superbowl this year as corn feed costs soar. what's ahead for grain futures in 2013? > > i am the chicken expert here. it takes 2 lbs. of grain to make 1 lb. of chicken, so that is the reason you have got these prices up 30% from last year. so it will be interesting to see what the weather brings us for next year. that is the one thing that you can't predict and you don't know what is going to happen. > > weather will be important, but you also look at u.s. farmers. they are going to plant 99 million acres of corn. that will be the highest level since the 1930's. there is going to be way too much supply on corn. i think the ags are going lower. > > rain makes grain. without moisture we get no grain. and right now we have no snow cover on the ground here in chicago. 55 degrees in- > > i want to do one more trade: i want to short chicken wings and buy chicken ribs. > i love it. let's take a look
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at the bonus round question: name the latest business venture for sharon osbourne, the wife of rocker ozzy osbourne. her latest business venture. > > i know, with the kardashians, i'd say she's going to be a manager? > > it is a spoon for ozzy's mouth so he doesn't drool. > very close. she is going to be representing atkins diet. good to have you guys on the show. > > thank you. > we will be right back.
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joining us now for some chart talk, scott bauer of trading advantage. good morning scott. > > good morning angie. > we are talking microsoft and starbucks both came out with earnings after the close. let's start with microsoft. what do you think about this stock? it was trading lower last night after the close.
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> > we saw earnings per share right in line. the whisper number was 77, estimates were 75, came out 75. right in line. revenues were just a tad short. they were about $150 million short or so. the big thing for microsoft right now is how is this windows 8? how is this integrating into their entire macro... lets call it "product base?" that is what their basic platform is now for the coming years. they have the new tablet coming out in two or three weeks. how are people accepting this windows 8? that is what we really have to sit and digest and see what the numbers are on that. but i will tell you that microsoft traded down last night to about $27.20 or so. $27 is really a pretty solid support area here. so i think that this is a great place to nibble and probably get in. > starbucks also traded lower after the close last night, but the company went as far as to back its 2013 numbers. why was this not good enough for wall street? > > i'm not really sure, because when i looked at it, the big thing to me, the big thing
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out there in the analyst community, let's say, is same- stores - how many are they opening up? the number that everyone was kind of looking at was 5.5% increase. they are opening up over 7% yield comparable same-stores for next year, and actually in china, in asia, there are going to put in another 1000 stores by the end of this year. that is just unreal. that coupled with the fact that we have seen good numbers coming out of china in the last few months, where maybe there has been a bottom in that economy, to me, that signals that starbucks might be ripe for really great expansion here. > thanks for your help today. that is scott bauer of trading advantage. > > thanks angie. that's it for us. coming up next week, talk show host and music manager sharon osbourne will be here to tell us how she created a net worth of more than $150 million. thanks for watching today. from all of us at first business, have a great weekend!


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